1    

   The  following  summary  of  SHRM’s  IRS  990  2014  report  has  been  prepared  by  the  SHRM  Members  for  Transparency  (SMFT).    Given  a  lack  of  SHRM  volunteer  and  chapter  officials’  support,  SMFT  has  discontinued  efforts  to  encourage  the  SHRM  Board  to  revise  certain  policies  and  practices  that  SMFT  feels  are  not  in  the  best  interests  of  the  SHRM  members.  This  IRS  990  analysis  is  SMFT’s  only  continuing  effort  and  is  only  justified  by  the  value  of  the  comparative  statistics  dating  back  to  2008.    It  is  published  to  assist  SHRM  members  and  others  to  understand  this  important  50  page  IRS  required  report  on  SHRM  practices  and  financial  status.      The  SHRM  IRS  2014  990  is  the  most  recent  report  available.    The  due  date  for  submission  of  the  2014  990  report  was  originally  May  15,  2014.    However,  SHRM  has  asked  for  extensions  and  their  report  was  submitted  November  12,  2015        We  encourage  interested  parties  to  read  the  complete  2014  IRS  form  990  Report  which  can  be  obtained  from  the  IRS  or  GuideStar,  a  not  for  profit  organization  who  tracks  activities  of  organizations  like  SHRM.  (See:  http://www.guidestar.org/Home.aspx.1    

EXECUTIVE  NARRATIVE  SUMMARY    1.  As  reported  in  the  2012  990  report,  2012  was  the  first  time  SHRM’s  CEO,  Mr.  Hank  Jackson,  was  paid  greater  than  one  million  

dollars,  actually  $1,292,308,  including  deferred  compensation.    Mr.  Jackson’s  total  compensation  reported  for  2014  has  increased  to  $1,784,456,  including  deferred  compensation.    This  is  $242,099  or  13.6%  greater  than  Mr.  Jackson’s  2013  compensation.        

2. The  number  of  SHRM  employees  during  2014  was  384,  a  decrease  of  26,  a  6.3%  decrease  from  2013.    Selective  layoffs  were  executed,  presumably  because  of  deteriorating  business  conditions.  

3. The  number  of  SHRM  volunteers  increased  to  8115,  an  8%,  increase  from  the  prior  year.    4. Reconciliation  of  net  assets:  

  2013   2014   Change  Total  revenue   $114,561,872   $113,021,588   -­‐$232.491  

                                                                                                               1  As  of  this  date,  March  2016,  neither  the  IRS  nor  GuideStar  have  made  SHRM’s  990  available.  The  990  utilized  for  this  analysis  was  obtained  from  SHRM.    

2    

Total  expenses   $109,664,067   $113,254,069   +$3,590,002  Revenue  less  expenses          $4,897,805   -­‐$232,481   $5,130,286  Net  Unrealized  gains  on  investments.2   $11,287,355   -­‐$5,697,055   $5,590,300  Net  assets  as  of  12/31/   $143,089,642     $126,578,384   $16,511,278  

NOTES:  • Revenue  decreased  for  one  of  the  first  times.    • Expenses,  however,  increased  $3,590,002  over  2013  levels  for  a  3.3%  increase.    • 2014  net  operating  outcome  was  a  loss  of  almost  one  quarter  million  dollars.    

• Total  net  assets,  including  losses  on  investments,  decreased  $16,511,278  or  11.5%.    

• Member  dues  at  $45,076,237  were  only  39.9%  of  total  revenue,  down  from  the  2013  level  of  46.3%  of  total  revenue.      When  combined  with  the  Annual  Conference  revenue  that  accounted  for  21.5%  of  revenue,  almost  two  thirds  of  all  revenue  came  from  those  two  sources.    

• Since  2008,  on  an  operational  basis,  SHRM  has  lost  $29,255,442  (losses  four  of  the  seven  years)  and  had  revenue  in  excess  of  expenses  of  only  $10,896,833.    

 5. Staff  compensation  

a. Five  SHRM  executives  were  paid  greater  than  $500,000  during  2014.    They  were  Mr.  Jackson  (already  highlighted  as  compensated  at  greater  than  $1.7  million);  SHRM’s  General  Counsel,  Mr.  Henry  Hart  who  earned  $715,977,  Robert  Carr,  VP  Membership  and  Marketing  at  $684,450,  Debra  Cohen,  SVP  Knowledge  Development  who  earned  $542,735,  and  Brian  Dickson,  VP  Development  at  $505,055.    

6. SHRM  Board  compensation  a. The  total  compensation  for  the  2014  Board  (excluding  Jackson)  was  $273,797.    The  highest  was  $38,797  reported  for  the  

2014  Chair,  Ms.  Bette  Francis.    

                                                                                                                 2  Unrealized  gains  on  investments  is  the  IRS  requirement  for  nonprofits  to  report  the  current  value  of  investments,  not,  for  instance,  the  purchase  price.    Unrealized  means  the  stocks  are  not  sold,  but  the  current  value  of  all  investments  is  what  is  recognized  as  the  value  of  such  assets  on  SHRM’s  Balance  sheet.    It  does  not  reflect  operating  results.      

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7. Legal  expenses:    

a. At  almost  one-­‐half  million  dollars,  SHRM’s  legal  expenses  were  the  greatest  in  five  years  and  $229,865  or  88.1%  greater  than  2013.    

   ISSUE   2014   2013   2012   2011   2010     2009   2008  

Number  of  employees  

384   410   380   360   352   Not  reported   Not  reported  

Total  number  of  volunteers  

8115   7590   6743   7925   7240   Not  reported   Not  reported  

               Income  Statement  

             

Program  service  revenue  

$89,968,737   $94,150,876   $88,692,178   $83,840,039   $75,  311,  847   $68,123,996   $83,162,988  

Investment  Income  

$7,518,796   $7,081,350   $4,411,005   $8,201,572   $6,641,  419    Unknown    Unknown  

Other  revenue  

$15,534,055   $13,323,646   $11,138,259   $9,831,221   $11,834,645   $13,876,571   $14,938,418  

Total  revenue  

$113,021,588     $114,561,872   $104,241,441   $101,872,832   $93,787,911   $81,210,439   $87,656,236  

Grants   $742,184   $1,130,906   $578,720   $625,871   $636,  300   $105,241   $433,364  Salaries  and  benefits  

$50,034,026   $50,315,915   $47,217,853   $42,996,352   $40,124,333   $37,072,991   $36,313,800  

Other  expenses  

$62,477,859   $58,217,246   $55,429,533   $53,264,917   $56,259,873,   $52,721,900   $86,009,745  

Total  expenses  

$113,254,069   $109,644,067   $103,220,106   $96,887,140   $97,020,506   $89,900,132   $104,756,909  

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Revenue  less  

expenses  on  

operating  basis.  

-­‐$232,481   $4,897,805   $1,015,336   $4,985,692  (Note:  greater  than  $13  million  of  SHRM  

Foundation  Assets  were  transferred  to  

SHRM’s  Balance  Sheet3  

-­‐$3,232,595   -­‐$8,689,693   $-­‐17,100,673  

 Balance  Sheet   2014   2013   2012   2011   2010   2009  Total  assets   $204,533,051   $206,668,817   $188,197,236   $174,854,31

2  $177,891,001   $169,837,291  

Total  liabilities   $77,954,667   $63,579,175   $73,621,499   $67,943,531   $53,992,252   $48,581,080  Net  assets   $126,576,384  

(includes  $5,697,055  in  

unrealized  losses  on  investments.)  

 

$143,069,642  (Note:  Includes  $11,287,355  in  “unrealized  gains  on  investments.  $    

$114,575,737  Note:  Includes  $9,131,387  in  “unrealized  gains”  on  

investments.  

$106,910,781  

$123,898,749   $121,256,211  

             

                                                                                                               3  As  announced  in  the  Independent  Auditors  Report  effective  January  1,  2011,  under  Financial  Note  5,  the  SHRM  Foundation  is  reported  as  being  consolidated  with  SHRM  and  its  subsidiaries  “due  to  common  control.”    A  result  of  this  decision  was  that  $13,883,662  –  all  of  the  SHRM  Foundation’s  assets  –  was  transferred  to  SHRM’s  Balance  Sheet.    SHRM  management  informs  us  this  is  an  administration  action  and  will  not  affect  the  operations,  decisions  or  spending  capabilities  of  the  SHRM  Foundation.  They  further  report  that  the  SHRM  Foundation  activities  and  reserves  show  up  only  for  GAAP  accounting  purposes  on  the  SHRM  audited  consolidated  financial  statement  –  not  in  the  Form  990.  (See:    SHRM  Consolidated  Financial  Statements  and  Supplemental  Information  for  Years  ending  December  31,  2010  and  2011.    http://www.shrm.org/about/reports/Documents/SHRM2011_2AUDITFinalFS.pdf.)  It  is  our  opinion  that  this  presumably  “one  time”  transfer  of  assets  does  not  permit  an  adequate  comparison  of  SHRM  financial  results  between  years  2010,  2011  and  2012.  Had  this  action  not  taken  place  SHRM  would  have  experienced  a  decrease,  not  an  increase  in  net  assets,  as  reported  for  2011.    The  SHRM  Foundation,  as  a  501(c)(3),  must  file  its  own  IRS  form  990.  (See:  http://www.guidestar.org/FinDocuments/2011/346/610/2011-­‐346610067-­‐08e2f347-­‐9.pdf.)    

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Major  sources  of  revenue  

           

Membership  dues   $$45,076,273   $43,596,380   $42,203,407   $39,089,271   $35,453,590    Annual  conference   $24,267,105   $26,907,199   $24,259,923   $23,668,997   $19,770,344    Advertising   $$10,  215,883   $12,415,181   $12,394,780   $12,535,746   $12,066,604    Seminars   $6,562,799   $7,278,160   $6,094,000   $5,163,875   $4,865,451    Other  conferences   $3,811,465   $3,941,848   $3,704,527   $3,352,207   $3,029,720    All  other  program  service  revenue  

$35,212   $12,108   $35,541   $29,943   $126,138    

Total   $89,968,737   $94,150,  876   $88,692,178   $83,840,039   $75,311,847                  Major  expenses  -­‐  Staffing  

           

Compensation  of  current  officers,  directors,  trustees  and  key  employees  

$10,043,082   $9,110,543   $7,128,791   $7,123,641   $8,054,355    

Other  salaries  and  wages  

$29,039,683   $28,776,644   $27,212,277   $25,473,134   $23,429,188    

Pension  plan  contributions  including  401(k)  

$3,744,573   $6,031,910   $7,021,684   $5,072,525   $3,618,900    

Other  employee  benefits  

$4,779,407   $4,067,546   $3,579,439   $3,211,957   $2,986,350    

             Other  major  expenses:  

2014   2013   2012   2011   2010    

Legal  expenses     $490,667   $260,802   $292,852   $399,509   $184,198    Accounting  expenses  

$78,005   $176,904   $95,364   $122,290   $107,555    

6    

Lobbying  expenses    

$376,849   $354,669   $334,555   $319,092   $208,514    

Investment  management  fees  

$573,028   $496,216   $480,286   $264,423   $347,293    

Advertising  and  promotion  expenses  

$6,576,149     $3,004,434   $4,864,223   $5,796,295   $6,746,619    

Office  expenses     $9,123,293   $9,037,285   $8,929,517   $8,750,596   $9,130,480    Information  technology  expenses  

$3,011,914   $2,  962,280   $2,579,693   $2,565,008,   $2,433,148    

Travel  expenses   $3,640,708   $2,653,094   $2,675,192   $2,438,583   $2,429,767    Conferences  and  meetings  expenses  

$11,609,891   $13,431,588   $11,962,082   $11,193,071   $9,785,307    

             Chapter  support   $1,610,408   $1,634,518   $1,635,250   $1,772,778   $1,378,853                  Investments                Investments  –  public  traded  securities  

$117,582,795   $121,091,437   $107,527,304   $103,657,020  

$100,651,040    

Investments  –  other  securities  

$21,345,968   $21,712,328   $18,525,564   $14,689,859   $21,916,536    

             Activities  outside  the  United  States  

  2013   2012   2011   2010   2011  

South  Asia  -­‐  total  expenditures  (India)  

$750,000  Maintains  three  offices  with  

approximately  31  employees  and  

$3,000,000  SHRM  India  

maintains  three  offices  with  

approximately  33  

$3,101,647  (Note:  India  has  1893  SHRM  members,  an  

increase  of  20%  

$5,002,175   $2,500,000    

In  2010  SHRM  reported  SHRM  India  

The  2011  SHRM  Member  Directory  at  the  time  of  this  analysis  

7    

independent  contractors.  

employees  and  independent  contractors.  

over  2011.      However,  each  India  member’s  cost  is,  at  $1638  

each,  unacceptably  

high.  

has  three  offices  and  21  employees  or  contractors.  The  SHRM  Member  

Directory  at  the  time  of  this  

analysis  indicates  there  are  2,130  members  in  India  for  a  cost  

of  approximately  $1,178  per  member  

indicates  there  are  only  1,359  members  in  India,  a  36%  decrease  from  the  prior  year.      

East  Asia  and  the  Pacific  -­‐  total  expenditures  (China)  

$25,528  Maintains  one  office  with  four  employees.  

$85,556  SHRM  China  maintains  one  office  with  

approximately  4  employees  

$278,713  After  several  years  of  effort,  the  SHRM  Member  

Directory  at  the  time  of  this  

analysis  (2014)  reports  there  were  only  314  members  in  China,  an  

increase  from  the  226  reported  last  year.  The  

$283,894   $331,346      

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average  2012  cost  per  member  

was  $888.  Mexico  and  Canada  –  total  expenditures  

$29,356   $270,914   $24,821   $5,403   $40,871    

Europe  including  Iceland  and  Greenland  -­‐  total  expenditures  

$51,424   $116,171   None  reported     None  reported  

$1,065    

Middle  East  –&  North  Africa  

$57,891  Maintains  one  office  with  

approximately  3  employees  

$150,000   None  previously  reported    

     

South  America     $5,000   $10,758   None  previously  reported  

     

Sub-­‐Saharan  Africa    

$9079   $340,505   None  previously  reported  

     

Central  America  &  Caribbean    

$2,000,000   $2,000,000   None  previously  reported  

     

Total  investments  in  countries  other  than  the  United  States.    

3,497,960   $5,932,904          

             First  class,  business  class,  companion  travel,  housing  allowances  and  tax  

Dollar  amount  not  disclosed.  A  total  of  16  

people  received  various  First  

Dollar  amount  not  disclosed.  

A  total  of  20  people  received  various  First  Class  and  

Dollar  amount  not  disclosed.    A  total  of  15  people  received  various  First  

Dollar  amount  not  disclosed.  

Dollar  amount  not  disclosed.  

SHRM  has  an  employee  travel  policy  permitting  First/Business  

9    

indemnification  payments  required  to  be  reported  to  the  IRS.  

Class  and  Business  Class  travel  during  

2014  

Business  Class  travel  during  2013.      

Class  and  Business  Class  travel  during  2012.      

Class  international  travel  for  any  flight  5  hours  or  longer.      SHRM  has  a  Board  policy  allowing  all  Board  members  and  the  SHRM  CEO  to  fly  First  or  Business  Class  regardless  of  time  or  distance  required  –  a  very  generous  practice  compared  to  other  nonprofit  organizations.      

  2014   2013   2012   2011   2010    Highest  compensated  employees    

           

$500,000  or  more  Hank  Jackson,  CEO    Henry  Hart,  General  Counsel    

 $1,774,454  

   

$715,977    

 $1,532,358  

   

$612,822    

 $1,292,308  

   

$559,158    

 $997,590  

   

$490,133    

 $551,806  

   

$357,603    

 

10    

Robert  Carr,  VP  Membership  &  Marketing,      Debra  Cohen  VP  Knowledge  Development  and      Brian  Dickson,  VP  Development  at  $505,055.    

 $684,450  

   

$542,735        

$505,055  

 $520,430  

   

$483,149        

$419,931    

 

       

$456,844        

$373,506  

       

$421,061  

       

$360,724  

12  executives  earned  $300,000  -­‐  $499,000    

           

Gary  Rubin   $355,424,   $488,113   $461,563   $465,202   $377,405    Mary  Mohney   $478,024   $426,555   $391,803          Jeff  Pon   $468,180   $408,759          Heidi  Byerly     $381,988   $342.353            Margo  Vickers     $380,418   $325,320            Mark  Schmit  (SHRM  Foundation)    

$359,777            

Leon  Rubis   $359,149            Michael  Aitken   $351,556   $321,084   $317,489   $318,364      Lisa  McConnell       $330,097              Elizabeth  Block   $323,087            Tim  Canny   $307,180            Alexandria  Alonso   $304,535            

             

11    

Reportable  Compensation  of  Board  members  

    2012   2011   2010    

Henry  (Hank)  Jackson    

$1,774,454   $1,532,358   $1,292,308    

     

José  Berrios   Off  Board   $51,299  Past  Chair    

$109,572  Chair  

$35,000   $23,603    

Jeffrey  Cava   $20,000   $20,300   $25,000   $20,000   $13,603    Bette  Francis   $38,797   $37,258  

Chair  $35,000  

 $25,000   $23,603    

Jorge  Consuegra   $20,000   $20,300   $20,000   $5000      James  Kaitz   0     $25,300   $25,000   $25,000   $13,603    Brian  Silva  Chair  designate    

$30,000   $25,300   $20,000        

Coretha  Rushing     $25,000   $25,300   $20,000        My-­‐Chau  Nguyen   $25,000   $20,300   $20,000   $10,000        Lori  Carlson   $20,000                    Jose  Tomas   $25,000   $20,300   $15,000        Lorio  Carlson   $20,000   $15,300          Jennifer  Pollino   $20,000   $20,300          David  Windly     $20,000   $20,300          Thomas  Derry   10,000  (as  of  

August  2014)            

Scott  Washburn   $20,000                  Conflict  of  interest  policy    A  special  part  of  IRS  form  990  is  Part  VI,  Section  B,  which  requires  SHRM  to  comment  on  their  conflict  of  interest  policy.    Their  lengthy  explanation  is  open  to  challenge,  specifically  with  regard  to  the  Board  initiating  and  approving  its  own  compensation  and  

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benefit  programs,  inconsistent  with  association  practice,  Board  Source,  and  the  American  Society  of  Association  Executives  guidelines.      In  addition,  the  SHRM  Member  Discipline  process  consists  of  only  Board  members  initially  judging  members’  ethical  conduct,  including  any  complaints  against  their  fellow  SHRM  Board  members.    Previous  complaints  against  Board  Members  regarding  conflicts  of  interest  have  been  rejected  by  the  Board  Members  on  the  Review  Committee,  thus  pre-­‐empting  discussion  by  the  Hearing  Committee,  which  is  the  only  element  of  the  Member  Discipline  process  that  has  regular,  non-­‐Board  members  on  it.  Therefore,  conflict-­‐of-­‐interest  complaints  against  Board  Members  were  dismissed  by  Board  Members,  resulting  in  yet  another  serious  conflict  of  interest.    The  Board  has  been  aware  of  this  conflict  of  interest  for  approximately  five  years  and  has  done  nothing  to  rectify  it,  allowing  Board  Members  to  remain  completely  immune  to  any  member  discipline.            SHRM  Membership:    There  is  no  requirement  for  SHRM  management  to  report  SHRM’s  membership  to  the  Internal  Revenue  Service  on  the  IRS  990  reporting  form.    An  analysis  of  SHRM’s  situation  would  be  incomplete  without  a  reference  to  SHRM’s  membership.    As  indicated  below,  SHRMs  membership  has  increased  each  year  since  1990.    

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   However,  as  indicated  by  the  following  chart  the  percent  increase  in  SHRM  membership  has  decreased  rather  dramatically  during  the  past  several  years.        

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 The  question  is  whether  or  not  the  number  of  HR  professionals  in  the  profession  is  increasing  or  decreasing?      The  United  States  Department  of  Labor  reports  HR  jobs  are  increasing,  not  decreasing.    This  includes  HR  specialists  such  as  labor  relations  and  training  and  development  as  well  as  compensation  and  benefit  managers.      

Percent  Change  in  Employment,  Projected  (2012-­‐2022)    

 Human  Resources  Managers    Total,  all  occupations    Management  occupations          

13%  11%  7%  

 

Note:  All  Occupations  include  all  occupations  in  the  U.S.  Economy.  Source:  U.S.  Bureau  of  Labor  Statistics,  Employment  Projections  program    

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With  the  number  of  HR  professionals  increasing  there  should  be  a  good  opportunity  for  continued  SHRM  growth;  therefore,  current  membership  recruitment  efforts  should  be  reviewed  for  their  effectiveness.            Prepared  by  SHRM  Members  for  Transparency  volunteers      

 March  11,  2016                File:  9990  IRS  SHRM  2014  Submission  Analysis  Feb  2016